Nationwide Financial Services Inc. has settled charges that it mishandled unclaimed life insurance death benefits.
The settlement, which was led by the Florida Department of Financial Services and six other states, requires Nationwide to begin monthly checks against the Social Security Administration's Death Master File and to locate the appropriate beneficiaries. Over the course of three years, Nationwide also will provide the seven lead states with quarterly reports about the implementation of these requirements.
Four other Nationwide entities were named in the settlement: Nationwide Life Insurance Co., Nationwide Life and Annuity Insurance Co., Nationwide Life Insurance Co. of America and Nationwide Life and Annuity Insurance Co. of America.
In the settlement, Nationwide admitted no liability.
The agreement is the most recent in a series of settlements between life insurers and state insurance regulators and treasurers. A multistate audit that started in 2008 zeroed in on the insurance industry's compliance with unclaimed-property laws.
Regulators criticized insurers after the audit showed that the companies used the Death Master File to end annuity payments to deceased people but failed to consult the lists when the time came to pay benefit proceeds to beneficiaries or to states. MetLife Inc., Prudential Financial Inc. and John Hancock Life Insurance Co. all previously have settled with state regulators.
Going back to 2007, Nationwide started an internal effort to improve its unclaimed-property reporting. Two years ago, the carrier also commenced an initiative in response to the multistate examination, checking its in-force individual-life-insurance files against the Death Master File.
Since the multistate examination, Nationwide has paid out $144 million in proceeds to life and annuity beneficiaries who haven't filed claims.
“After cooperating in this process, we look forward to fulfilling the terms of this agreement and moving forward with this matter resolved,” said Mike Switzer, a Nationwide spokesman.
Florida, North Dakota, California, Pennsylvania, Illinois, New Hampshire and Ohio led and signed off on the agreement. Other states have until Dec. 7 to sign off and partake in the settlement.